ACCC to investigate Coles, Woolies

Date: February 15 2013

Eli Greenblat

ACCUSATIONS that Australia's two grocery giants, Coles and Woolworths, engaged in improper practices to force down prices from suppliers are being investigated by the nation's most powerful competition regulator.

The head of the Australian Competition and Consumer Commission, Rod Sims, will investigate the two retailers - which between them control an estimated 70 per cent of the nation's grocery spending - about potential breaches of the law and bullying tactics against food and grocery suppliers.

The ACCC has warned it will use its compulsory information powers to collect evidence.

It comes as Wesfarmers, the conglomerate that owns Coles, on Thursday confirmed to the Herald it had pushed Coles executives to further investigate accusations of wrongdoing and misuse of market power when dealing with its own suppliers.

''We are doing our own investigations and obviously the ACCC is doing its and we will just let it all unfold,'' the Wesfarmers boss, Richard Goyder, said.

About 50 suppliers to the big chains have responded to the ACCC to come forward with evidence of unconscionable behaviour, under the promise of protection of their identity.

Suppliers have been complaining for years that the two supermarket chains, which last year booked combined revenue of more than $70 billion from their Australian stores, were using market power to bully them over prices and supply.

The ACCC chairman is investigating allegations that include:

persistent demands for additional payments from suppliers, above and beyond that negotiated;

the imposition of penalties that did not form part of any negotiated terms of trade;

threats to remove products from shelves or otherwise disadvantage suppliers if claims for extra payments or penalties are not paid;

failure to pay prices agreed with suppliers;

discrimination in favour of homebrand products.

Mr Sims told a Senate estimates committee in Canberra on Wednesday that during the ACCC's meetings with the suppliers their allegations were consistent. The serious allegations, if proven, carry multimillion-dollar fines.

Mr Goyder told the Herald that Coles had internal processes to ensure it acted in a responsible and ethical way with its suppliers, with staff reminded through extensive corporate literature on how to behave.

Claire Kimball, a spokeswoman for Woolworths, said: ''Woolworths has a very strong focus on ensuring its business dealings are fair and lawful.''

This material is subject to copyright and any unauthorised use, copying or mirroring is prohibited.